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Home Guaranty joins ‘bond’ wagon


[ Malaya.com.ph ] February 20, 2009

By DENNIS GADIL

Home Guaranty Corp. , the government institution that promotes home ownership by issuing risk guarantees on housing loans, will push through with its own bond float worth P5.5 billion.

HGC president Gonzalo Bongolan yesterday said the bond float will have a tenor of seven years and would be undertaken in the first half of the year or around June.

"We’re going ahead with it, hopefully by June," he said in an interview during Thursday’s HGC-hosted Third Philippine Housing Finance Forum in Makati City.

Bongolan said proceeds from the bond float would be used to refinance the agency’s outstanding debts.

He said the interest rate have yet to be determined by the market.

The bond float of the HGC is its fourth since 2002 when it floated P7 billion worth of debt papers.

In 2004 and 2006, the HGC sold P3 billion and P12 billion worth of bonds, respectively.

The seven-year tenored 2006 HGC bonds fetched 6.375 percent while the second tranche fetched a lower rate of 5.875 percent.

Bongolan said preliminary data by his agency showed that they did well in 2008.

He said the company’s total assets comprising of commercial, industrial and residential assets stood at P38 billion in 2008 while its liabilities including zero-coupon bonds, debenture bonds, and guarantee obligations amounted to about P20 billion.

Bongolan earlier predicted a 13 percent growth in guarantee covers this year from the projected P72 billion in 2008. The agency has P9 billion worth of housing securities in its portfolio as of end December 2007. HGC has issued a total of P72.82 billion worth of guarantees to client / partner banks in December 2007, which was 15 percent higher than the P 63.57 billion in 2006, and benefited largely low and middle-income families.

Bongolan nevertheless expects a downturn in the housing sector this year owing to the global financial crisis.

In his speech during the Philippine Housing Finance Forum, Bongolan said there would be a slowdown in the housing sector.

He said although there would be a total of two million housing units needed until 2010, only 643,000 to 900,000 units would be actually built.

The HGC chief said of the total, only 160,000 units could be absorbed or funded by the economy.

"Need does not necessarily mean demand," Bongolan said, noting a big disparity in need and demand.

Bongolan said there would be "pockets of downturns" in the housing sector but stressed it may not be "across the board." He said the government’s P330 billion stimulus package should benefit housing and real estate this year but said cost of borrowing may not go down due to the high risk premium required by lenders.

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